by Kevin McCoy, USA TODAY

by Kevin McCoy, USA TODAY

JPMorgan Chase is being pressed to disclose a secret legal document that could provide new details of how the nation's largest bank handled and sold billions of dollars in now-toxic mortgage securities.

Prepared by the U.S. Department of Justice during its probe of JPMorgan's mortgage practices, the document is a draft court complaint prosecutors planned to file if the two sides had been unable to finalize the record $13 billion settlement announced last week.

It was probably given to the global bank as a negotiating tactic during talks that ultimately produced the settlement terms, attorneys for the Pittsburgh bank argued.

"The draft complaint most likely provides a rich source of detailed facts about JPMorgan's conduct that have not yet been made public," David Beehler, an attorney for the Pittsburgh bank, argued in the motion filed with the Court of Common Pleas in Pennsylvania's Allegheny County.

"And those facts should be made public, not only to aid private litigants such as Pittsburgh FHLB in the pursuit of their claims, but also to inform the public of the basis for the DOJ's settlement," argued Beehler.

Judge R. Stanton Wettick ordered JPMorgan to comply with an Oct.17 ruling by producing the draft complaint. He also ordered the bank to disclose the name of a confidential informant who provided information about JPMorgan's mortgage-related operations to federal investigators.

In response, JP Morgan attorneys on Friday filed a motion to vacate or amend Wettick's order.

"The circumstances of this motion therefore lead to one obvious question - what is JPMorgan trying to hide?" argued Beehler.

A Department of Justice attorney who negotiated the settlement with JPMorgan signaled that the department would not try to prevent disclosure of the draft complaint, court records show.

The legal battle over the draft complaint, reported earlier by Bloomberg News, focuses on specific allegations of mortgage-related wrongdoing by JPMorgan that the Department of Justice was prepared to file against if settlement talks had collapsed. The announcement of the deal included a statement of facts that contained more generic descriptions of problems with mortgage-backed securities issued and sold by the global bank.

Such investments - groups of mortgages with varying degrees of risk bundled into securities - were one of the factors that led to the nation's 2008 financial crisis.

In 2006-2007, the Pittsburgh bank bought three mortgage-backed securities that purportedly contained highly rated mortgages. But the bank argued in its lawsuit that JPMorgan "misrepresented" the riskiness of the underlying loans, and the securities "were actually junk."

The investments currently are worth no more than 60% of their original value, argued the bank, whose losses weren't covered by the government settlement. Stung by the financial setback, the bank said it suspended its shareholder dividend in late 2008 and later suspended a charitable program that helped some first-time home buyers with down payments and closing costs.